Question 1198834: Suppose that your unsubsidized Stafford loans plus accumulated interest total $ 35000 at the time you start repayment, the interest rate is 6% APR, and you elect the standard repayment plan of a fixed amount each month for 10 years. What is your monthly repayment?
Repayment amount =
How much will you pay in interest?
Interest paid =
Answer by CPhill(1959)   (Show Source):
You can put this solution on YOUR website! **a) Monthly Repayment:**
* **Principal:** $35,000
* **Annual Interest Rate:** 6% (0.06)
* **Monthly Interest Rate:** 0.06 / 12 = 0.005
* **Loan Term (months):** 10 years * 12 months/year = 120 months
**Formula for Monthly Repayment (using the present value of an annuity):**
* **Monthly Repayment = (Principal * Monthly Interest Rate) / (1 - (1 + Monthly Interest Rate)^(-Number of Payments))**
* **Monthly Repayment = ($35,000 * 0.005) / (1 - (1 + 0.005)^(-120))**
* **Monthly Repayment ≈ $388.57**
**b) Total Interest Paid:**
* **Total Amount Repaid:** Monthly Repayment * Number of Payments = $388.57 * 120 = $46,628.40
* **Total Interest Paid:** Total Amount Repaid - Principal = $46,628.40 - $35,000 = **$11,628.40**
**Therefore:**
* **Monthly Repayment:** $388.57
* **Total Interest Paid:** $11,628.40
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